Retiree Health Care Costs Flattened Last Year, Fidelity Finds

Fidelity Investments estimated that a 65-year-old retiring in 2023 can presume to spend an average of $157,500 in health care and medical expenses throughout retirement.

Following successive years of rising estimates, health care costs in a 2023 retirement appraisal were estimated flat from last year, Fidelity Investments stated in a press release.

The 2022 Fidelity estimates for retiree health care expenses were $150,000 for men and $165,000 for women, and the 2021 estimates were $143,000 for men and $157,000 for women. When Fidelity began estimating health care costs in 2002, the figure for a single retiree was $80,000.

“While this year’s estimate offers a welcome reprieve from a decade of increasing health care costs, retirees are still expected to cover significant costs above and beyond what Medicare covers,” Hope Manion, senior vice president and chief actuary at Fidelity Workplace Consulting, said in the release. “Understanding what your health care costs may be in the future is an essential part of the retirement planning process.”

Fidelity’s estimate assumes retirees are enrolled in traditional Medicare, Fidelity noted. Between Medicare Part A and Part B, benefits cover expenses like hospital stays; doctor visits and services; physical therapy; lab tests; and more, and Medicare Part D covers prescription drugs, Fidelity added.

Protections enacted on prescription drug costs have moderated what retirees are likely to pay for health care in the future, Fidelity finds.  

The estimate of health care expenses “remains the same as last year, due to expected limits to retiree out of pocket costs for prescription drugs starting in 2025,” the release stated. “This is the first time in nearly a decade that the anticipated health care costs for retirees have stayed flat year-over-year.”